As part of its ongoing support for Uganda’s power sector, MIGA has issued $115 million in guarantee coverage for the Bujagali hydropower project. The guarantee is insuring an investment by World Power Holdings Luxembourg S.à.r.l., a subsidiary of Sithe Global (USA), against the risk of breach of contract. The insurance is for up to 20 years.

The project consists of the construction and operation of a 250 megawatt, run-of-the-river hydropower plant on the Victoria Nile by Bujagali Energy Ltd. (BEL), of which Sithe Global is a partner. The project will be developed on a build-own-operate-transfer basis. Once commissioned in 2011, the plant will re-use water flowing from two existing upstream facilities to generate electricity. The project also includes an associated Interconnection Project, which consists of a series of transmission lines to be owned and operated by the Uganda Electricity Transmission Company.

Reliable and accessible electricity is critical for Uganda’s social and economic development. Yet today, only five percent of Ugandan’s have access to electricity. Daily power shortages have stunted economic growth by an estimated one percent of the country’s gross domestic product. The Bujagali project is expected to increase supply to the national power grid at the lowest cost compared to other power generation expansion options under Uganda’s energy strategy, thereby reducing outages and costs.

Total project cost is estimated at $799 million. In addition to MIGA’s guarantee, the World Bank Group is supporting the project with $130 million in loans from the IFC and a partial risk guarantee of up to $115 million from the International Development Association. MIGA’s guarantee was considered essential to securing Sithe Global’s investment. This is the second electricity project that MIGA has supported in Uganda in two years.